Jones Public Accountants has been hired to perform a financial audit for Wyoming Electric Cooperatives Corporation. Under the Sarbanes-Oxley Act of 2002 (SOX), once Jones has completed the audit, it must:

A. report to the audit committee of Wyomings board of directors and include any significant flaws it finds in Wyomings internal controls, alternative options that Jones considered in preparing the financial statements, and any accounting disagreements with management.

B. report to Wyomings senior management committee and include any significant flaws Jones finds in Wyomings internal controls, alternative options that Jones considered in preparing the financial statements, and any accounting disagreements with management.

C. report to the audit committee of Wyomings board of directors and include any significant flaws it finds in Wyomings internal controls.

D. report to Wyomings senior management committee and include any significant flaws it finds in Wyomings internal controls.

Assessment question

Oscar is an accountant for Chemco Partnership and is preparing the annual tax return for Chemco. A careful review of Chemcos books shows Chemcos revenue for the year was $1.5 million. The CEO of Chemco, however, wants to minimize the tax liability of the company, so the CEO asks Oscar to falsify the tax returns by stating that revenue was only $200,000. Concerned about the possibility of losing his job, Oscar complies. The IRS discovers the underreporting and charges Oscar with making false statements in a tax return. If Oscar is successfully prosecuted, he could face:

A. a fine of $500,000 and imprisonment for up to three years.

B. a fine of $500,000 but not imprisonment.

C. a fine of $100,000 but not imprisonment.

D. a fine of $100,000 and imprisonment for up to three years.

Assessment question

Karla enters into a contract with Worldwide Enterprises to serve as the company accountant. Karla prepares financial statements, tax returns, and other financial documents for Worldwide. Neighborhood Sales is considering buying out Worldwide and asks to see Worldwides financial statements and tax returns, which Worldwide shares with them. Among Karla, Worldwide, and Neighborhood Sales, privity of contract exists between:

A. Worldwide and Neighborhood Sales.

B. Karla and Neighborhood Sales.

C. Karla and Worldwide.

D. Karla, Worldwide, and Neighborhood Sales.